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At its 16thsession, held on 18 December 2020, the Government of the Republic of Serbia issued the Decree on the Amount of the Fee for Incentives for Privileged Electricity Producers in 2021 (hereinafter: the “Decree”), based on which the fee for incentives for privileged electricity producers, payable by citizens and undertakings, is increased almost five times. Consequently, this fee will amount 0.437 RSD per consumed kilowatt-hour (kWh) instead of the previous 0.093 RSD per kWh.

Fee for incentives for electricity producers is calculated by multiplying the determined amount of the fee per kWh by the amount of active electricity consumed by the end customer in the billing period. Therefore, the calculated amount of the fee is visible on citizens’ monthly electricity bills.

Prior to this drastic increase determined by the Decree, the amount of the fee for incentives for privileged electricity producers was last increased in 2015, from 0.081 RSD to 0.093 RSD.

Serbia introduced the fee for incentives for privileged electricity producers in 2013, aiming to provide funds to incentivize the production of renewable energy in wind farms, small hydroelectric power plants, biogas power plants and solar power plants.

To the owners of these plants, having the status of privileged electricity producers, incentives are paid in the form of feed-in tariffs, representing an incentive purchase prices per produced kWh, which are harmonized with the applied technology and prescribed by the Government of the Republic of Serbia for a certain period of time, thus incentivizing the investors and reducing the investment risk.

Interestingly, almost all EU member states, as well as most non-EU countries in the region, have replaced feed-in tariffs with auctions or concessions, considering them as a more market-oriented incentive models that reduce subsidies, finally payable by the citizens and the mere economy.

However, even though Serbia has announced introduction of auctions that would reduce allocations for subsidizing renewable sources in the future, feed-in tariffs for existing privileged electricity producers in Serbia could not be abolished at the moment, since they were approved for a period of 12 years, depending on the start of a production.

On the other hand, it is interesting that the Republic of Srpska recently reduced the fee for renewable sources, payable by consumers, from0.0075 KM per kWh to 0.0064 KM, which represent a reduction of approximately 15%. Previously, since 2015, this fee in the Republic of Srpska has been only increased considering that the production from renewable sources was also increased, and thus more funds were necessary for payment of subsidies.

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Milos Pandzic, LL.B.

Milos Pandzic, LL.B.

Partner

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milos.pandzic@doklestic.law

Aleksandra Stojanovic, LL.M.

Aleksandra Stojanovic, LL.M.

Managing Associate

  • Corporate, Commercial, M&A
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  • Contract Law
  • Public Procurement

aleksandra.stojanovic@doklestic.law

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